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It's easy to reproduce:
1. Put an image in a zip archive
2. Mount that archive with "archive mounter"
3. Try to set that image as background with either "drag 'n' drop + Alt" on the
desktop or by dragging the image in the Appearance Preferences
4. Watch it fail
I guess it's a Nautilus bug, but I'm not really sure. Karmic user here.
** Affects: nautilus (Ubuntu)
Importance: Undecided
Status: Incomplete
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Can not set a background image from a mounted archive
https://bugs.launchpad.net/bugs/548859
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